~2 min read
Pricing a SaaS product is one of the most leveraged decisions a founder makes. Raise prices 10% and you increase revenue 10% at zero marginal cost — no new customers, no new features. Yet most SaaS founders underprice by 20–40% because they anchor on cost rather than value.
This calculator uses two inputs to find your pricing floor: your cost per customer per month (infrastructure + direct support) and your target gross margin. It then suggests a three-tier structure anchored to a competitor reference price.
How SaaS pricing tiers work
Most successful SaaS products use three tiers:
- Starter (60% of competitor mid-tier price) — captures SMB and early adopters
- Pro (competitor mid-tier price) — the anchor tier that most customers choose
- Business/Enterprise (2× competitor mid-tier) — captures value-sensitive large customers
The Pro tier does the heaviest revenue lifting. Price it too low and you leave money on the table; price it above the market without differentiation and you increase churn.
The gross margin floor
Your minimum viable price is cost_per_customer / (1 − target_margin). At $8 COGS and 75% target margin: $8 / 0.25 = $32/month minimum. Below this, every customer you add destroys gross profit margin.
Most SaaS targets 70–80% gross margin. Below 60%, unit economics are difficult to sustain. Above 85% is possible for pure software (no support headcount, no managed services).
Annual pricing strategy
Offering annual prepayment at a 15–17% discount: - Improves cash flow (you receive 12× MRR upfront) - Reduces effective monthly churn (customers can only churn at renewal) - Signals commitment (customers who pay annually churn at 3–5× lower rates)
The break-even on the annual discount is typically 3–4 months of avoided churn.
How to use this calculator
Enter your cost per customer per month, target gross margin, current or target customer count, and a competitor reference price. The calculator outputs a full three-tier price structure, MRR projections, annual plan prices, and your gross margin at the recommended rates.
What does this calculator do? Calculate optimal SaaS pricing tiers based on your costs, target margin, and willingness-to-pay — with monthly and annual plan analysis.